In our last review of AT&T (T) back on October 19 we were too bearish as we wrote, "Investors may be attracted to the yield on T now (7.72%) but prices remain weak and likely to head lower. Avoid the long side for now."
Prices briefly made a lower low in late October but that was the end of the selloff. T has rallied into early December and corrected to make a higher low. Is this part of the basing process or a pullback to do some buying? Let's check out the charts again.
In this updated daily bar chart of T, below, we can see the low in late October. Prices turned higher and the On-Balance-Volume (OBV) line improved telling us that buyers of T had become more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator turned above the zero line in mid-November for an outright buy signal.
The OBV line and the MACD oscillator have pulled back in the second half of this month as prices have corrected.
In this updated daily Point and Figure chart of T, below, we can see the price improvement since the middle of October. The chart now shows a potential upside price target in the $34 area.
Bottom line strategy: Traders could approach the long side of T if they are willing to risk just below the October low. The $34 area is our upside price target for now.
